January 11, 2007
Sweetheart deal
The Dec. 27 news story (“Focus will shift to FAA funding”) on the attempt by commercial airlines to shift the cost of air traffic control modernization to smaller aircraft owners missed some key points.
The airlines, of course, are seeking a sweetheart deal that would cut their taxes while increasing fees for smaller aircraft operators. The general aviation industry represents the lifeblood of small businesses and small and rural communities all across America.
In justifying their Robin-Hood-in-reverse plea, the airlines revert to the time-worn mantra that consumers somehow will benefit by giving the big airlines a windfall once again.
But if history is any guide, your readers shouldn’t count on ever seeing more change in their pockets. Twice in the past decade, the taxes lapsed, and according to a 2004 General Accounting Office report, “carriers generally raised base airfares.”
Through the hub-and-spoke system at major airports – a system that the airline industry fights feverishly to maintain – commercial airlines are demanding ever more of the air traffic control system’s resources, while the smaller aircraft in general aviation are using less and less.
Instead of trying to impose our tax obligations on others, we in the general aviation community want to focus on modernizing the aviation system for all Americans. We hope the airlines will join us in a dialogue that will truly modernize our air traffic control system, improve safety in the skies and improve the efficiency of the industry.
President and CEO Ed Bolen
National Business Aviation Association
Washington
IN RESPONSE TO
Fort Worth Star-Telegram (Texas)
December 27, 2006
Focus will shift to FAA funding: American, Southwest can now work with each other after spending most of 2006 on Wright compromise
Dec. 27–For two years, Washington, D.C., was a battleground in the conflict between American and Southwest airlines over the Wright Amendment. Both carriers deluged lawmakers with appeals for support. Now that the struggle has ended with a compromise approved by Congress in September, both carriers find themselves on the same side of the latest aviation battle in the nation’s capital. Executives with American and Southwest say their top lobbying priority in 2007 will be to restructure how the nation’s aviation infrastructure is financed.
Their efforts are part of a broad effort by the commercial airline industry to revamp funding for the Federal Aviation Administration, the agency that oversees air-traffic control, airports and other aspects of the aviation system. Congress must reauthorize the agency’s funding this year, and the airlines see the reauthorization as an opportunity to get operators of corporate jets and small aircraft to pay a larger share.
“It’s great to have the Wright Amendment off our backs,” said Will Ris, senior vice president of government affairs for Fort Worth-based American. “It would have been a real distraction if we were dealing with that as well next year.” American will also push for more pension reform, and the industry plans to closely monitor security issues.
The change in control in Congress to the Democrats isn’t likely to have much effect on aviation issues, Ris said. “Transportation tends to be a pretty neutral thing,” he said. “You don’t see much of a partisan effect on these issues.” Regardless, the revamp of the FAA will be the chief focus in 2007. The major airlines argue that they pay the lion’s share of the costs of the nation’s air-traffic system through a ticket tax that dates to the 1970s, before industry deregulation.
According to the Air Transport Association, an industry trade group, commercial airlines pay 94 percent of the revenues that go into the aviation trust fund, which pays for airport infrastructure and improvements as well as some of the FAA’s operations.
But the airlines use 68 percent of the system, according to the group.
“There has been an explosive growth in general aviation,” said Sharon Pinkerton, the group’s vice president of government affairs and former head of policy for the FAA.
Some corporate aviation companies, like fractional ownership firm NetJets Inc., compete with airlines for first-class customers, she noted.
“Our argument is that they’re taking up significant resources without paying their fair share,” she said. Ron Ricks, senior vice president for law, airports and public affairs at Dallas-based Southwest Airlines, said he isn’t interested in squeezing money out of amateur pilots.
“The typical private pilot with a small, single-engine aircraft isn’t the issue,” he said. “We’re talking about the movie stars or the huge companies that have fleets of private jets.”
Ricks said a revamping of the FAA’s funding could lead to lower fares for consumers or reduce the need to increase prices.
“Look, if our tax burden weren’t so high, there wouldn’t be as much pressure to raise fares,” he said. “At the very least, we could keep fares the same and make more money.”
Small-aircraft owners, meanwhile, have blasted the airlines’ goals as unfair and misleading. They say general aviation adds only marginal costs to the FAA.
Phil Boyer, president of the Aircraft Owners and Pilots Association, pointed out that costs did not decline at Reagan National Airport when general aviation was banned from that facility after 9-11.
“If general aviation stopped flying tomorrow, how much less would it cost to run the air-traffic control system?” he asked in a statement.
The group points out that the aviation trust fund is projected to have a $4.2 billion surplus by 2011. “The system isn’t broken, and it doesn’t need to be fixed,” Boyer said.
Although FAA funding is a top priority, it isn’t the only item American will push in Congress next year. The airline is hoping to modify a recent pension-reform law to get some more relief in its funding obligations.
The law gave American and Continental airlines 10 years to pay off their funding shortfalls. But it gave rivals Northwest and Delta airlines 17 years, because those carriers had frozen their retirement plans.
Those airlines also got a more favorable interest rate on the pensions.
“We really feel like we deserve the same favorable treatment as the other airlines,” Ris said. He said it was unfair to penalize American for keeping its pensions intact.
The airline industry will also monitor efforts to increase security screening of cargo transported on passenger flights. That’s one issue on which Democrats have shown more interest than Republicans, Ris said.
“We’re happy to move toward standards that are more comprehensive, as quickly as we can,” he said. “But we want to be careful that those standards don’t put us out of the cargo business entirely.”
Pinkerton, of the Air Transport Association, said the group will push for cargo screening that increases the use of dogs trained to sniff for explosives. She said that method is more effective — and far cheaper — than electronic screening.
“Canine teams are very, very good at detecting explosives,” she said.
American and Southwest say they are likely to get a lot more done now that the Wright issue has been put to rest.
“It would have been extremely difficult to juggle those issues at once,” said Ricks, of Southwest. “And it also just feels good to have it all resolved.”
International Business Aviation Council Ltd.